Savings in Florida's Medicaid Program More Than Sufficient to Extend Services

The governor and majority leadership in the Florida House have persistently but unfairly attacked Medicaid—the health coverage safety net—for purportedly swallowing the state budget.  These claims have in turn been used repeatedly to justify rejection of proposals to extend health coverage to more than 800,000 uninsured Florida adults in or near poverty, despite the fact that the portion of the cost funded by already-paid federal tax dollars will never fall below 90 percent.

The fact is, not only has the percentage of and growth in state general revenue (discretionary) funding dedicated to Florida's Medicaid program been continuously overstated by critics, the federal share of Medicaid costs paid has also been continuously increasing.

More specifically, under the current Medicaid program, increases in Florida's Federal Medical Assistance Percentage (FMAP) will save Florida more than $2 billion state dollars over the 8-year period from 2011-12 through 2019-20. These savings far exceed the state's share of the cost of Medicaid expansion. In other words, the expansion has already been fully funded.

Furthermore, these increased FMAP rates are the result of Floridians' incomes slipping relative to those of the U.S. as a whole, as that comparison is the basis for the FMAP calculation. Uninsured, low-income adults—those affected most by the factors that have generated the state savings—are also the ones who continue to suffer as a result of the legislature's consistent refusal to reinvest those savings to provide coverage most will otherwise be unable to obtain.

> Read the report.


Scott Budget: Tax Cuts Consume Growth Dollars, Leaving Little for Investments in State Services

Governor Rick Scott's budget proposal for the 2016-17 fiscal year is notable for one stark fact: It proposes spending more than twice as much money from general revenue growth on tax cuts than on increasing funding for vital state services.

Of the state's more than $1.3 billion increase in general revenue from the current fiscal year to 2016-17, Scott proposes to use more than $1 billion of it on tax cuts - $920.1 million of it in permanent recurring general revenues.  He would use just $390 million on net new general revenue appropriations for education, health care, mental health, corrections, child welfare and all other areas funded by general revenue combined.

General revenue will grow 4.7 percent from 2015-16 to 2016-17, while the Governor's budget would increase general revenue appropriations by just 1.35 percent.

To be sure, the Governor's budget would increase general revenue expenditures in some areas of state government. But most of the increases are offset by reductions elsewhere through cuts to state services that have already experienced cuts in previous years. 

His spending plan fails to fund the level of services already provided through state general revenue dollars. Scott would spend $29.3 billion in total general revenue—permanent recurring dollars plus one-time nonrecurring money—while at least $30.9 billion is necessary to fund state operations under current law, state economists say.

> Read the report.

 
Return on Disinvestment: Threadbare Mental Health System Exemplifies the Case Against Tax Cuts

In his proposed state budget for 2016-17, Florida Governor Rick Scott has called for another round of significant tax cuts, this time on the order of a billion dollars. He proposes these cuts at the expense of funding for essential state services that have the potential to improve the lives of countless Floridians as well as Florida's fiscal and economic bottom lines. A prime example of an area where the Governor and Legislature have starved an essential service system to the breaking point is in the area of mental health.

In the most recent recognized comparison for which Florida-specific data was available, Florida ranked second to last (50th) among the states and the District of Columbia in percapita funding for mental health services.

For a relatively small investment, the Governor and Legislature could begin to reverse the effects of systematic disinvestment in the state-supported mental health system.

> Read the report.

 
More Low-Income Floridians Served Through Medicaid: Context and Implications

Despite Florida's strict eligibility rules, enrollment in Florida Medicaid continues to increase.

Increased Medicaid enrollment means that more extremely low-income, uninsured Floridians have health coverage they could not otherwise obtain.

Beyond this, the increases coincide with the launch and increasing awareness of the federal Health Insurance Marketplace, the subsidies available through the Marketplace that make coverage affordable, and the "No Wrong Door" system that facilitates enrollment in the appropriate coverage program.   

These elements have outstripped other demographic and economic factors in terms of their impact on enrollment during the past two years, but should have a far less substantial effect going forward.

 Recent consternation in response to enrollment growth in the Medicaid program is misplaced. Rather, concern might be better focused on the high numbers of Floridians living below the poverty line, with a focus on those caught in the health care coverage gap and therefore remain uninsured. The vast majority have no hope of obtaining coverage until such time as Florida expands Medicaid as called for in the ACA.

>Read the report.

 
The Condition of Florida

Accelerated population growth has helped fuel strengthening of Florida's economy, with many measures of economic health reaching their pre-recession levels.

Economic growth has been accompanied by an increase in state revenues. Revenues have risen six consecutive years after three years of declines from 2006-07 to 2008-09, and healthy growth is projected during the next several years.  

Despite these improvements, Florida continues to rank below most other states in many measures of the well-being of its residents, including state government expenditures for services. Even though state revenues are growing, so are the needs. The funds available to invest in meeting those needs have been reduced by continued annual tax reductions totaling almost $1.5 billion over the past three years.

Read the report.

 
Proposed Rate Increases for Health Coverage in 2016 Likely to be Moderate, Irrelevant to What Consumers Actually Pay

Most Floridians who directly purchase their health coverage on the state's individual market will be enrolled in a plan proposing moderate rate increases very much in line with pre-Affordable Care Act levels.

Most importantly, under the Affordable Care Act, plan rates and consumer premiums are often two entirely distinct concepts.  Given that the majority of Florida's individual market is now comprised of consumers purchasing coverage in the federal Health Insurance Marketplace, and that 94 percent of Marketplace customers received financial assistance in the form of Advance Premium Tax Credits in 2015, it is reasonable to expect that consumers purchasing their own coverage will see at most a nominal increase in the premiums they pay. 

Furthermore, those that would face premium increases may find them reduced or eliminated by switching to a different but comparable plan during the upcoming 2016 Open Enrollment period.

Read the report

 
Who Are the Newly Eligible?

The Florida Health Insurance Affordability Exchange program (FHIX) proposed by the Florida Senate (as well as other coverage expansions that would qualify for full federal funding under the Affordable Care Act) would make more than a million uninsured, very low-income Floridians newly eligible for real coverage. In general, these newly eligible individuals include uninsured, non-elderly adults (i.e., ages 19 to 64) who:

 

  1. Have family incomes at or below 138 percent of the Federal Poverty Level (FPL)
  2. Do not qualify for Medicaid based on rules for the current Medicaid program or Medicare
  3. Meet other basic criteria (for example, they must be either U.S. citizens or lawfully residing immigrants who have lived in the U.S. for at least five years).

 

>Read the report for more characteristics of the Newly Eligible. 

 
Health Care Expansion Requirements Could Limit Enrollment

When the legislature convenes in special session June 1, it will consider various proposals to provide health-care coverage to Floridians in households earning less than 138 percent of the federal poverty level who are not eligible for Medicaid. 

Legislative analysts estimate that 800,000 uninsured Floridians could gain health-care coverage under such proposals. 

But policymakers, in designing their new plan, should consider two facts: (1) work requirements will be difficult or impossible to meet for many intended enrollees; and (2) for workers at or below the poverty level, even modest premium payments and co-pays would further strain already tight household budgets.

Some proposals discussed contain requirements of applicants for health-care coverage that could limit the number of Floridians who would be insured. For example, evidence of employment, job training or additional education would be difficult to meet for many of the currently uninsured. 

>Read the report.

 
Measured Growth in the Medicaid Budget and of Managed Care Plan Payment Rates Will Constrain Costs of Medicaid Expansion

In the most recent round of debate by the Florida Legislature over whether or not to extend coverage to hundreds of thousands of the lowest-income Floridians though the Medicaid program (or an alternative that meets the requirements of the Affordable Care Act), opponents invoked many familiar and long-debunked arguments. 

Perhaps the oldest and most often cited of these claims is the assertion that the current Medicaid program is "spiraling out of control" and "swallowing the state budget."  But expansion would reduce state general revenue spending for Medicaid in the short term and the primary components of future spending growth appear poised to remain well-constrained over time as well. 

Examination of the spending picture makes it clear that not only is Medicaid a manageable and sustainable component of the state budget, expansion as called for in the Affordable Care Act would do nothing to alter that reality.

 

>Read the report.

 
Health Care Expansion Problems Cited by Leaders Are of Their Own Making or Already Addressed

For the past several years, leadership in the Florida House of Representatives has repeatedly rejected the opportunity to extend health coverage to non-elderly, uninsured adults with family incomes up to 138 percent of the Federal Poverty Level through Medicaid or an alternative as provided under the Affordable Care Act (ACA). 

In attempting to justify its refusal, Florida House leaders in particular have ignored or selectively interpreted almost every relevant fact pertaining to expansion and its implications for Florida. 

Many of the problems they identify as primary exist as a direct result of or have already been addressed as a result of deliberate choices made by the legislature. The fact that these conscious decisions have created or addressed many of the issues cited as impediments to expansion serves to directly discredit opponents' arguments.

>Read the report.   

 
A Chronology of Key Events: Medicaid Managed Care, the Low Income Pool and Medicaid Expansion

Review of a timeline of actions taken by Florida's legislative leadership and governors over the past decade on Medicaid reveals how state leaders have inconsistently and selectively used information to simultaneously embrace and undermine the program (and the flexibility/funding provided at the federal level).

 A chronology of actions from 2005 to the present sheds light on the current legislative impasse and the refusal of the House of Representatives to consider the Senate proposal to create the Florida Health Insurance Affordability Exchange program (FHIX). 

>Read the report.

 
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The Florida Center for Fiscal and Economic Policy
579 East Call Street
Tallahassee Florida 32301
Phone: 850-325-6480
Email: info@fcfep.org

The mission of the Florida Center for Fiscal and Economic Policy is to conduct independent research, develop new ideas, and advise policymakers on state fiscal and economic policy.  The Center pays particular attention to policy impacts on low- and moderate-income individuals, families and neighborhoods, workers, and small businesses.  The Center works to heighten public awareness of the need to adequately fund programs that improve opportunities, choices, quality of life outcomes, and the economic well-being of all Floridians.


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